Obscene Inequity

431 to 1.

According to United for a Fair Economy and the Institute for Policy Studies, that’s the average ratio of CEO pay to non-professional worker pay in 2004 in these United States. This represents a new trend in the wrong direction after a slight remission in this ratio since a peak at 531 to 1 in 2000.

A look at this four year old graph (thanks Spitting Image) will reveal why progressives were hardly enamored of the DLC directed leadership of Clinton in the nineties. But I contend that it doesn't require a progressive attitude to be appalled by this obscene inequity in pay between executives and line workers.

While the potential threat is dire, the outlook need not be so grim, as I really believe the possibility for corporate responsibility is nowhere near lost. Today corporate responsibility exists side by side with corporate malfeasance within many industries, and indeed within many companies. My impression, however, is that there are debilitating blindnesses on both sides of this debate, which make progress sluggish at best, while the trends do not look good. The problem within corporatedom is that there is an annoying reluctance, if not a taboo, against frankly facing the direness of the threat and entertaining truly radical reform among those advocating corporate responsibility. The problem among reformers who do see the direness of the threat is a similar blindness in acknowledging the necessity that industry insiders become a integral part of needed reforms.

It seems likely to me that these two groups eye each other with such distrust and suspicion that they don't take each other seriously and hence undermine the most hopeful course for achieving real progress in curbing the excesses that everyone should agree are not in anyone's interest.

The reform advocacy groups who don't have such reservations, such as: United for a Fair Economy; CorpWatch; or Inequality.org make unfettered observations which strike me as more honest, but I wonder if their adversarial approach precludes the conversation which needs to happen to actually effect some positive changes.

Free market apologists will protest that the inequities simply reflect the prices which the market will bear for CEO salaries, and that the buying power of the line workers hasn't really sunk (one will hear arguments that it has actually risen-I don't believe that) so much as the executive pay has skyrocketed. The IPS study shows that the stock value of corporations with the greatest payroll inequities are significantly less successful than those with more modest differences.

If you had invested in the stock of the company led by the year's single highest paid CEO each year since 1990, you actually would have lost money. You would have done nearly six times better by investing in the S&P 500 index. A $10,000 investment in such a Greedy CEO portfolio in 1991 would have decreased in value to $8,079 by the end of 2004, while a similar investment in the S&P 500 would have increased to $48,350.

And you can't tell me that it isn't morally wrong for the top paid executives in a company to make millions in salary, and many times that in other benefits, while the laborers who support their fortunes struggle to make ends meet. The market isn't working somehow, and not only is it shameful, it is bad for investors as well.

Shame may be the most effective tool for bringing about change, but it remains difficult to get an audience for these stories. The right-wing noise machine is committed to defending the free market against any effective controls, labeling even the attention to such matters as socialist claptrap. But beneath the surface, I bet you will find some executives who are uncomfortable with their obscene salaries, and there are plenty of examples of executives who refuse to take as much as they could. What is woefully needed is plain-spoken condemnation of the growing inequity within the corporate world. How can we help those within the system who long for more radical reform to be bolder in saying so?

I think it was a stark reminder of how 2 different groups of people could see a solution to a big problem. Katrina smashed cities and peoples lives into ruin… and one solution to help rebuild was an Executive order to lower worker’s hourly wages. That doesn’t require the contractor’s doing the rebuilding onto the consumers… so I can pretty much bet it’ll stay in the pockets of the Corporations doing the bulk of the rebuilding. The money (as well as the rebuilding) is needed in the communities ruined by Katrina, but the CEOs and major stock holders who will receive the profits don’t live in these areas… and so the chance of rebuilding the economy (by creating local - decent paying jobs) has been greatly diminished.

Just one more example of the powerful keeping as much as their fat fingers can grab and only giving up as little as possible to the average worker.

It continues to amaze me how and/or why peopole are so eager to ctiticize the wealthy for their hard work, ingenuity and risk taking in acquiring their “fortunes”.

It is not the fault of the wealthy that there are people who are less financially sound than they are.

What do you expect? That the wealthy should distribute their money to the lower income people so that everybody will have comparable wealth. Should the wealthy sit with a pile of money and/or assets and distribute “one for you and one for me”.

Never once do I see you Robin Hoods mention the ridiculous salaries of the professional athletes and the fact that they “work” about a third of the time as a top corporate executive. Also that they double and triple their salaries because their names are on sneakers, shirts, etc.

CEO’s making millions fret over ways to hire 10 more engineers, 20 more assembly line workers, or plan to lay-off workers, etc., when a tiny fraction of their ob$cene salary would pay for it.

It’s just more evidence of the cycle this nation is in.

We’re in an era of selfishness and greed, which not only explains the ob$cene compensation for CEO’s, but also the huge $8 trillion National Debt, the personal debt of about $32 trillion, the financial shift away from the U.S., falling incomes, the shrinking middle-income group, Congress votin’ itself raises, pork-barrel, graft, election fraud, government incompetence, the fiscal and moral bankruptcy of government, and the general decline of the U.S.

There are a number of issues that need to be addressed in this kind of discussion:

1) Do you put a cap on CEO earnings? And if so, what should that cap be? Who would be subject to that kind of cap?

2) How do you adequately pay a CEO who takes a company to great heights, such as a Warren Buffet or Bill Gates? Since they are the primary reason for the growth, shouldn’t they be rewarded financially?

3) How do you compensate someone like Shawn Fanning who wrote the Napster code and became its CEO? He spent very little time writing the code, but the fact remains that the idea, or summary of ideas, was his.

4) How about those in the workforce who have jobs that require a special skill that few have. Among these would be surgeons, financiers, athletes, entertainers etc. Should we cap the earnings of say a Jim Carrey or Donald Trump or Serena Williams, because they do not provide a necessary service to the public?

5) How do you provide incentive for a promising CEO to move to a struggling company? For example, what would entice a CEO of Jack Welch’s talents to try to revive one of the airlines? Seems to me you have to offer financial incentives beyond the norm in order to get a highly skilled person.

We saw this in the world of football when the USFL tried to create a new league. They overpaid players to play in the USFL. From the players’ perspective, they were taking a huge risk, and risk without reward is not good business.

Walker, I don’t get the impression that you are one of those simply interested in redistributing wealth, as some seem to be. But what solutions outside of free market forces do you suggest?

Steve,
Why I have no problem paying for those CEO’s and Managers that use their skills and knowledge to bring in Real Income for the corporations; however, I do draw the line at paying any citizen a wage just based on his/her title. Mr. Brown of FEMA is a good example of this policy found thoughout America and the World.

Are you telling me that because he padded his resume with things that are not correct and obtained a high paying job just because of his buddy that we as a society should him more for doing a job that any moron could of done?

No, America Corporations and “Learned Professionals” wages were increased during the 80’s & 90’s to get our Youth to go to college in the hope that they would learn to invest their money properly. Nothing more, nothing less. Because if we really would pay the proper wages to those citizens who make the Real Money for the corporations and citizens than a Dishwasher would make more money than a General Mahager. However, our society would be promoting the growth of our Nation based on how stupid we can keep are citizens. Not a very good idea.

As far as playing Robin Hood, “The Poor” have been robbing from “The Rich” in America for the last 25 years. While knowledge is a good thing and I will encourage every Human to learn all that they can, why is it that everyday a Laborer on the job has to point out the mistakes made by the Engineerings who design a building or home? Yet, which person gets paid more? True Capitalism would pay the person who has the experience and knowledge to do the job right not pay a person because they went to college and got drunk everynight, but still managed to get a diploma.

Where is it written that the words “rich” or “wealthy” are synonomous with Republicans. Is it safe to assume that no highly paid corporate executives are non-Republicans. If someone has a solid foundation of proof for that fact I would welcome the opportunity to see the reference material.

Since the average American worker makes around 65 times as much as a worker in Sierra Leone, Tanzania or Malawi, American liberals should start giving away their money until they’ve reached parity with these individuals.

I read with interest your writing about CEO pay. As a graduate student in 1996 I was involved in a study of worker motivation and the pay of the head of an organization. During my studies I found that the wage gap between the top workers and the CEO could be 10 to 1 without affecting worker motivation. However, more than 10 to 1 ratio began to seriously eroding the worker’s motivation for reaching the top in performance. Worker’s began to be de-motivated at this level. You are stating that we now stand at 431 to 1, can you imagine the discontent of the worker at this level of salary gap?

More than 10 to 1 in 1996 was found to be excessive. No wonder we have such labor problems today. I cannot for the life of me see a CEO making more that 10 times an organization top performers, but 431 to 1? This is totally unacceptable!

Imagine what the country (world) could accomplish by investing the difference of 421 to 1 in social safety nets! Everyone could have helath care and poverty pracitically wiped out, or at least greatly reduced!

We all should be screaming rape with the kind of disparity we are seeing today in corporate compensations.

Walker,
Good article and you are right about the huge difference in pay. However, you and all Americans have to remember the Societal Thinking that got us into this problem. In doing that, America will be forced to answer some hard questions. However, The Powers-to-Be must weigh the true profits that can be made and the resoucres that we have just as Our Elders did 25 years or so ago.

While I’ll agree with JBOD about not limiting the Spirit of Free Entrprise in America, I would like to point out that unless Americans are willing to pay $10.00 for a hamburger at McD’s it is up to us to find an alternative way to make “The Poor” paying jobs in America have a livable wage.

Scanners in stores, self-service gas stations, and robots in factories and stores are only the first step, but what happens to all citizens and corporations when the Labor in America can not pay for what they can consume?

History will show that this cycle of higher pay for Management than Labor is replaced by higher wagers for Labor than Mangement from time to time. America is just now at that point in history were this cycle is having to change. The future and more direct question to this topic is which jobs in our society is Americans willing to do without. Do we just make it illegal to make a job that pays less than $50,000.00/yr? What type of a society would we have if we eliminated those jobs such as police, nurses, clerks, etc.?

Sanger,
As a business person, how much more profit could your company make if every human was economically viable to buy your products and service? More important and to the point, does your corporation have the ability to handle such an increase if it wad done overnight?

Because with a swipe of a pen, we could make it happen. $5.00/week or less than a dollar a day for 25 years is all it takes to change the world forever, now the only question is do business leaders want to make money or just keep the riches of the world for themselve?

The one point that matters most within all this: the shrinking middle class. CEOs and top execs are taking more and more out of the companies they run while salaries for the middle class are at best are stagnating, and many are slipping. When you also look into the issues with minimum wage and the social costs of having full time jobs that do not provide a livable wage…

The middle class has been the economic engine for the past 50 years in our country… and as that disappears, no one comes out ahead. The monstrous salaries CEOs have come to expect, our health care system, retirement… the housing market…

I have no idea how you could ever impose a cap of salaries… maybe it could be a function of PR that encourages companies to pull Exec salaries back into proportion with company pay structures… maybe Wall Street might exert pressure there… who knows.

However, as a small business owner (and making at best 1.5x my employees salaries) I see a great danger and very little gain in the Execs salaries growing as they have.

Seems to me that you deserve more than 1.5X what your employees make. Based on the concept of risk/reward, you seem to be taking on the largest portion of risk with not much of the reward. If the business fails, you lose your job, company, and potentially your savings. If the business fails, your employees move along to another job.

If someone writes a book, they deserve the lion’s share of the profits, especially if they publish it themselves. Oprah Winfrey decided to bankroll her own show by producing it herself; as a result, she has reaped the benefits of the risk she took.

What I have never understood about this topic is why investors tolerate the obscene salaries companies pay to CEOs.

If I buy a share of stock, I give the company my money so that they can do something to make themselves more profitable. Then I get a piece of the action if they are successful. If the only thing that a company can think of to do with my investment is to give the CEO a 45% pay hike, I?d say they were throwing my money away! Is this really the best way to use the shareholders investment? Are investors really this dumb?

Is the skill set for a CEO really so rare that it warrants such lavish compensation? I have not seen many grand ideas that have come out of the head offices of large corporations that have changed the lives of Americans for the better. Innovations leading to productivity gains are not the brainchildren of CEOs but come from lower down the pecking order. A CEO may set the direction for a company, but what is the price for failure? A golden parachute that makes lottery winners look like paupers.

If a company is so screwed up that the CEO needs to actually revamp the entire organization, maybe he or she deserves a large salary. But again, that looks to me like a company I would not want to invest in.

In regards to pro athletes, they get paid what they get paid because they have a unique and sought after skill set. I can understand why they make as much as they do. It is pretty easy to tell which team is better than another because there is a score at the end of the game that tells you. If you are in the business of winning games you have got to have the right players; second-rate players will be exposed very clearly for what they are. Individual players performances can be rated statistically. In short, it is a lot easier to tell a good player from a bad one and good players are a rarity. They get paid what the market will pay for their skills. (The fact that the market values their skills more than a heart-surgeon paints a dismal picture of our priorities, but that is another topic.)

CEOs, on the other hand, are more difficult to measure in terms of their performance. Most investors will have little knowledge about what decisions a CEO is responsible for and which were made by others in the company. If a company does poorly, that may or may not be the fault of the CEO. How do you measure CEO performance? Stock price only? Would the company fare better with someone who demanded a lower salary?

The pay discrepancy between CEO and average lackey will not change until investors make it change and right now they appear to be asleep at the helm.

I’m a Republican, but I happen to find CEO (and even lower executive) salaries and options ridiculous myself. I

It’s especially ridiculous to say that somebody deserves so much money when their companies are failing or barely making a profit. It’s absurd to say that such outragious compensation is deserved for someone’s superior manegerial skills when I’m sure that the lowliest worker in their firm, the person cleaning the toilets,say, could run the company into the ground equally well and for less money!

I don’t see any legal solution to the problem, however, that wouldn’t cause more problems that it solved. The only thing that will break the logjam is active monitoring and involvement by investors and their representative boards.

As d.a.n. points out, there’s a good conservative case for bringing these outlandish salaries back to earth. More money left over for expanding the work force, more money for product development and marketing, lower margins that can be passed on the consumers—all things that would increase the company’s bottom line.

But saying this a Republican-invented situation is ridiculous. Does anybody think that a liberal mavens, like Puffy Combs, makes anywhere near the same amount as those working in the sweatshops that produce his lines of clothing?

Do you think that Ben and Jerry don’t make several thousands time more money than the kids scooping ice cream in their stores or the dairy farmers who sell them milk?

Another example: look at Silicon Valley and the Bay Area, where there are still thousands of dot.com millionaires running around who haven’t worked since the bubble burst and will probably never need to work again unless they choose to. These are people who made enormous amounts of money running companies that never made a profit, which hyped products nobody needed or wanted and which often didn’t get out of the development stage or even work like they were supposed to when they did. These are companies which in many cases no longer exist.

These dot-commers, most of whom are white and privileged, give predominantly to liberal causes (including Moveon.org, which came right out of that culture).

“But the Democrats are unable to advance even the most modest increases to the minimum wage. No that would be socialist!”

My family, especially my husband, falls under the category of “under paid and struggling” as he can demand a wage of about $7/hr. However, he is resistent to any increase in the minimum wage, because prices go up. If minimum wage is $5.15/hr., his wage of $7/hr. gives him $1.85/hr. more buying power. While that’s not much, he’s earned it. If the minimum wage were to rise to $7/hr., my husband wouldn’t get a raise, he’d simply lose what little “extra” buying power he has earned. So my husband, who has fifteen years experience in fast food and similiar customer service positions, that allows him to walk into a store and demand $7/hr., just lost the benefits of his experience as far as wage goes, while at the same time, because labor is more expensive, so would the things we have to buy. How is this beneficial, since there are more people who are working just above minimum wage than there are actually working for it?

I happen to be in a pretty unique situation. First - I have 4 employees. Usually, the Exec-style salaries come from allowing each employee to contribute a small portion towards sustaining that salary. With only 4 people - it does add up to much.

Also, I am in the film and video business… and the people who work for me are pretty expensive. You can either hire good people or make good excuses (something like that…) My employees are all considered professional level salaries - no hourly or low wage earners… so that also explains some of why our salaries are similar.

One good benefit to this - my employees ‘own’ this company… they have ownership in what we produce. They stay late - work over the weekends… all on their own accord. We’re a very family oriented company, and I find myself spending more effort ensuring that everyone focuses on their family first than trying to get the work done around here.

Actually - I caught some flack from other small business owners a few years ago - when the market dropped. My business partner and I went 14 months out of a 2 year period without salaries to ensure that our employees never felt the impact of the slow economy. It sucked then… but you can not buy the kind of loyalty we have now. (I dont want to portray my self as a do-gooder  you have to understand that these guys are my second family. I guess you just do what you have to do.)

What I’d like to see more of is this (and variations of it are being done with some companies, as I understand it).

A CEO could be hired at say five times the salary of the company’s average salary. After that, his salary rises at the same rate his magagment skills increase the company’s bottom line. If the company makes 100 times as much money under his leadership, he makes a 100 times more than that intial amount and can make a good argument for actually deserving it.

But if the company makes half as much money, he gets half the salary. If the company loses money, he works for free or gets fired because that’s what happening to the investors whose interests he represents. If he doesn’t like working for free and can’t figure out to increase profits, then he can quit and good riddance.

But if he doesn’t like working for free but has some great vision for the company which makes him think operating at a temporary loss will pay big dividends down the road, then let him take the same risk as everybody else and then reap the benefits when his vision becomes a reality.

I guess some anger aimed at the CEOs and their salaries is that they are not tied to success or failure. Generally, if the company does good, their salary and stock options go further through the roof… but if the company fails, they cut themselves a monster golden-parachute out of what’s left of the company and leave the investors and employees to sort through what’s left.

Stephanie -
What if your husband could get a raise based on store performance before the CEO (or franchise holder) took their share? What if they split the net gains? There’s no difference to make up in costs… and I’m betting that it would be a hell of motivating factor for your husband. To me - if one of my employees, for example, considers putting off the purchase of new tires for their car… that they would need to weigh the risk to their family against other needed expenses, then I am a failure in running the business. How could I expect great work out of them if they were worrying about their family’s safety?

Richard, good post.
tony — both of yours were excellent, too.
You wrote:
“Katrina smashed cities and peoples lives into ruinï¿½ and one solution to help rebuild was an Executive order to lower workerï¿½s hourly wages.”

I couldn’t believe it when I read about this! Such an outrage.
But, you realize of course, it is things like this that will cause the Republican’s to lose in the next elections. I believe that the majority of American’s are completely fed up with all the Neocon’s notions about the economy.

Steve Smith:
“What do you expect? That the wealthy should distribute their money to the lower income people so that everybody will have comparable wealth.”

That the wealthy start realizing that what is best for the economy is also what is best for average earners. And that all workers should at the very least be allowed to make a living wage. This also has a side benefit that all taxpayers should be able to appreciate — the fact that many of those who are currently living in poverty wouldn’t have to look to the government for public assistance as often as they are now.

“If someone writes a book, they deserve the lions share of the profits, especially if they publish it themselves.”

That’s not how it works. If they publish it themselves, the author tends to make the lion’s share, except for the cost to print and market, which is more costly for an independent.

With your risk factor theme in mind, it’s the publisher taking the risk, not the author. A good publisher will give an author an advance, for what they assume the book will make, then go through the expense of printing the book, which can be quite costly, and only after it reaches the shelves (usually 12-18 months after the initial contract is signed) can they start reaping the rewards for their faith in the author/book. If the book doesn’t sell as well as they expected, they lose the money. The author (generally speaking) doesn’t have to pay the advance back, and they certainly don’t get the costs of printing back. They are s.o.l. Which is why, publishers get anywhere from 50-95% of the profits.

The reason CEOs make so much is because they control the directors who control the purse. If you want to change things, you make a law that says directors must be an outside group. Furthermore, you insist that employees as well as shareholders be represented on the board.

“How could I expect great work out of them if they were worrying about their familys safety?”

I applaud you for your concern for your employees, but my husband’s never even met any of the owners of the companies that have employed him. I’ve had better luck with that, but I’ve more marketable skills.

My husband’s experience is in low-level customer service, with little chance to break into the mid-levels in our area. Right now, it is more expedient for me to work, then for him. I will at least make a few bucks more an hour, and if I find the right job, I can double his salary easily. Which, in the grand scheme of things isn’t a lot, nowhere near $50,000 a year, but it will have a dramatic impact here at home.

My question for you is: When you’re talking about asking questions like “Do you want fries with that?” or “Do you want to ‘go large’?” how do you compare that productivity to the CEO’s? How do you even measure that, when the CEO has 20-200 stores he’s in charge of, compared to one guy among ten in charge of taking orders?

I’m certainly not against doing something to reverse this trend…I’m just not seeing the practical comparisons to those at the top to those at the bottom.

I’m looking at the productivity of each store - the profit the store makes and then looking at how to divide it among the people driving that profit. I see the owners need to get money from their investment, but I also think its important to fund those who make the money.

Unfortunately, in certain situations, it’s almost impossible for the owners to separate out the skills of someone with 5 years of experience verses just hiring someone new at a lower hourly wage, especially if they never met the people that work for them.

I can relate to your situation - sort of. When I got out of college, my first tax return had me at $6800 for the year (1990). When I started the company, I made $1000 per month. But (and this is a huge BUT!) I did not have kids and was living with my soon-to-be-wife - who also worked. We made ends meet, and drove our tires down to the threads… But, now things are good. I still spend every penny I make, but I also buy tires when I need to… I consider myself very lucky.

Maybe I’m too much of a hippie… looking at the stars as much as the Wall Street Journal, but I now have people who look to me for a paycheck - in a way I support their families… and that’s a pretty big profit for the soul.

My understanding of the term NEOCON - comes from a movement away from the Democrat party (1970s) by those who felt there needed to be more of a military assertion by America in world events… A stronger military voice against Communism. As well, neocons are extremely focused on business needs and agendas.

However, is has gone from increasing our military influence in the world to our military demands on the world… ‘might makes right’ - ’ the end justifies the means’… I think the same goes for business matters with regards to the environment, worker’s rights and wages… etc.)

The way I see it - the neocons have hi-jacked the Republican party - put on a religious facade - to gain the ends they desire.

The problem with your idea is that CEO’s can often make a company look like its making money, when it isnt necessarily the case. For instance, simply cut out the maintenance budget to make the bottom line look better. The problems won’t occur for several years, perhaps when a new CEO arrives. There are many other ways to “cook” the books to increase share price in the short term etc.

Adrienne:

What exactly is a “living wage”? I’d appreciate if you can answer numerically, since statements I’ve gotten from others such as “enough to live on” or an “adequate salary” don’t really define much. Also, the goal is to increase people’s buying power. One concern of raising the minimum wage is that prices will go up. If McDonald’s has to pay $10 per hour, then their food prices will go up, potentially creating an even larger gap.

Stephanie:

I agree regarding the publisher scenario. I was meaning to refer more to someone creating something (a book, CD, movie etc)and publishing it themselves, as Stallone did with Rocky. Many such artists take the cash advance up front in lieu of all the profits, since there is less risk for them.

Its kind of like commission salespeople vs non commission. Some would prefer a stable $60 K income to a fluctuating income from $40K to $90K. Depends on the risk reward ratio someone is willing to accept.

CEO’s and top executuves serve at the pleasure of the Board of Directors. As such their salaries must be voted on and approved by that body.

Stockholders vote on who they wish to constitute the Board of Directors and are issued full disclosure annual reports. Stockholders also determine which accounting firms will represent the company.

Executive compensation is a matter of public record. Incentives and bonus payments are voted on by the stockholders as well.

There are CEO’s who go from corporation to corporation “righting the ship” using their highly developed and effective business leadership skills. This makes the stock a viable investment option which is good for everybody in the company regardless of income level. Also external investors, which has the same effect.

How much of the complaint about executive compensation is envy disguised as a perceived inequity in the economic structure.

Henry Schlatman, for what reason did you see fit to cite Mike Brown as an example in this issue. Never mind, I know what the reason is.

“Neocon” refers to ex-liberals who are probably more “progressive” than not when it comes to domestic economical issues?

:^D Oh sanger, you’re always joking!

Actually he wasn’t, though I suspect he knew who you meant and could have left well enough alone. Ironically you may have been closer in your original assertion, had you written: “I believe that the majority of Americans are completely fed up with all the neoliberal’s notions about the economy” but that would have confused more readers than what you did write.

domestic policy does not define neoconservatism; it is a movement founded on, and perpetuated by an aggressive approach to foreign policy, free trade, opposition to communism during the Cold War, support for beleaguered liberal democracies such as Israel and Taiwan and opposition to Middle Eastern and other states that are perceived to support terrorism.

Neoliberalism refers to a political-economic philosophy … that de-emphasizes or rejects government intervention in the economy…, focusing instead on achieving progress and even social justice by encouraging free-market methods and fewer restrictions on business operations and economic development.

I believe there are quite a few people who can rightly be defined as both neoconservative and neoliberal, since the former relates more to foreign policy and the latter to economic policy. I’m personally closer to being both liberal and conservative than I am to either of the neos. Just call me “classical”, I guess. ;-)Posted by: Walker at September 12, 2005 5:46 PM

While many different formulas exist that allow our elected officials to play the âDodge the Bulletâ game on what is a Livable wage, the standard long established by HUD (Housing and Urban Development) is 30% of a Familyâs Income going to shelter and utilities. soucre That being said, lets take a closer look at exactly what this means. The National and Regional cost for a single family home while varying from State to State and City to City is approx. $184,100 in 2004 according to HUD. This information can be found on page 68 of U.S. Housing Market Conditions under Table 11. Also, in this table you will see a Median Income of $54, 527.00 and a Qualification Income of $41,136.00

Yet, even this figures can be misleading due to the size of a family. Common Sense will tell us that the more mouths you have to feed the more money it takes to support your family. This reason is best shown in the 2005 HHS poverty guidelines Take the time to look at this Table and you will quickly find that a Family of Six qualifies as living in Poverty with an income of $41, 450.00. Thus, a Family of Six living in poverty can qualify for purchasing an affordable house.

To add further to the conundrum and misunderstanding by many citizens is what is known as the Basic Family Budget (the income a family needs to secure safe and decent-yet-modest living standards in the community in which it reside). This amount varies even more depending on where a family lives. From Boston in the north to Atlanta in the south to La in the west, we are all aware of the cost differences that natural exist in our society. Economic Policy Institute did a good article on this conundrum of why it cost more to live in one area over another. Yet, the main point of this article about what a Livable wage is just how much difference it cost to live in Casper Wyo. ($2,607.00/mth) compared to Boston Mass. ($5,388.00) for a family of four (two Parents two children).

Now, if we want to have all the families making under $15.16/hr to leave in Casper Wyo. Than we would no longer have a social problem. Well almost, because if all the workers making under $15.00/hr live in Casper, what happens to those citizens in the rest of the nation who rely on the jobs this citizens perform. No, why the complexity that makes up what a livable wage is the best solution to the problem is education and the building of homes that cost less to own. Quickly check out the numbers of Drop outs and those who do not have a college degree whoâs familyâs budget falls below that of a livable wage and than ask yourself two very clear questions. Do you need a college degree to do most of the jobs in America? And can you live in a city that would not have these citizens doing the jobs that they do? I hope that at least enlighten you a little bit more JBOD on what is considered a Livable Wage.

Steve,
Why do you think I mention Mr. Brown? Now, if he would of done what Mr. Wlech(sp) did for GE, I’d have no problem paying him a good salary. However, did the CEO and Upper Management of Enron deserve their paychecks?

Well, it’s just what it says.
Enough of an hourly wage to ensure that even the least skilled of American workers aren’t completely poverty stricken, or forced to go on public assistance.
More people on public assistance means that wherever you or I live, we’re giving away our tax base and that always means a lower quality standard of life. For instance, the budget for public education is automatically going to suffer from paying out huge sums on public assistance — not a good thing for our children, or for people trying to improve their educations in order to get better jobs.

“Iï¿½d appreciate if you can answer numerically, since statements Iï¿½ve gotten from others such as ï¿½enough to live onï¿½ or an ï¿½adequate salaryï¿½ donï¿½t really define much.”

No one can answer with a single number for the entire country and claim they’re being logical, Joe. This is why I believe Acorn has always had the right idea. The only way to achieve a fair living wage all across the country is to do it passing city by city, or county by county laws and ordinances that support a living wage for workers in those places.

“Also, the goal is to increase peopleï¿½s buying power.”

Yes. Paying living wages has been proven to drive local economies very effectively forward because the money payed out usually goes directly back into that economy because of those workers buying goods and services.

“One concern of raising the minimum wage is that prices will go up. If McDonaldï¿½s has to pay $10 per hour, then their food prices will go up, potentially creating an even larger gap.”

Actually this defies common sense, because the truth is the increase in labor costs due to creating a living wage (almost everywhere it has been accomplished thus far) have been proven to be typically around one percent of business opperating costs on average. In fact, most businesses find that they end up saving money by paying a living wage, because it reduces worker turnover and improves employee morale — which then pays off in higher efficiency, productivity and better quality service — things which are always key to successful business. Also, this reduces expenditures which are payed out for having to train new employees all the time.

Really, if you’re interested you should look into some of the studies that have been done after living wage laws have been passed in areas of the country. It’s always good news all around — for the businesses, the workers, and for those communities.

steve smith,
You mentioned confusion over why peopole are so eager to ctiticize the wealthy for their hard work, ingenuity and risk taking in acquiring their fortunes.

If your point is that we should reward hard work, how do you account for the Republican-led repeal of the estate tax? Thanks to that action, there will soon be a whole class of people who did ABSOLUTELY NOTHING to deserve their millions, other than be born to wealthy parents.

Steve,
Thanks, I’m glad to see that most reasonable citizens recognize the difference between profit and cooking the books. The problem with the way we pay our employees should take on the same manner. Although I’m not sure if the regulation is still in play, but I do remember under President Regean there was a regulation that basically stated if a corporation made over $250,000.00 per quarter in profit that they would have to increase their employees wages or be taxed at I believe a rate of 20% for all profits, thus ensuring good management.

tomd,
I am not going to yell at you; however, I would like to see you justify your answer. Remember the Market is driven by Pure Profit and letting the Powers-to-be set the wages against the profit would mean that they would elect to pay the CEO $0.00 if they knew that they could get away with it. Now we may use your idea when it comes to paying High School Drop Outs as an insentive to get them to stay in school.

As ob$scene as CEO salaries are, I don’t support legislation or laws to control it. Government meddling is not the answer.
Employees could have some influence, but it’s unlikely they’d risk their own job, which gets back to the core problem with corporations, government, and this nation, that is in decline in this era of selfishness, greed, and fiscal & moral bankruptcy. The root cause? Laziness
No you say? Yes. It’s true. In this stage of the historical cycle, people have no compass, no leadership, no conscience, which is why we’re doomed to repeat history.

Also, has anyone read the book by John Perkins, Confessions of an Economic Hit Man ?

I’m not trying to create class warfare, because not all wealthy are guilty; but there are a very few with vast wealth and power that are spreading their own brand of legal plunder, and corporatism, that serves to shrink the middle-income levels, and create cheaper and cheaper labor.

“Maybe Im too much of a hippie looking at the stars as much as the Wall Street Journal, but I now have people who look to me for a paycheck - in a way I support their families and thats a pretty big profit for the soul.”

I’m glad for your success. I truly am. If I sounded at all jealous, I want to tell you I’m not. Nothing my husband or I have done has earned what you’ve earned. We’re trying to develop a business, but we’ve been at it for less than a year and thus our “success” appropriately reflects that.

Now, as of today, I have a job that’s going to improve our situation and let my husband concentrate on growing his business instead of working chump jobs, so…I’m feeling pretty good!

Aside from that, my husband had an idea, which I will relate to you because the whole “critique the message not the messanger” isn’t something he’s very good at. :-|

His idea is concerning a law for minimum wage: Make the law respective to the companies, everyone who worked for a particular company would have to make at least a 20th of what the top wage-earner of that same company makes. So, if I’m doing my math right (big IF here), if the CEO made 1 mil a year, then everyone under him would have to make at least 50 grand a year. That seems to me like a good way to reduce the fiscal inequities within a company.

This is the point I would make: This country is rich because of a thriving middle class. We buy the products that make America the wealthiest nation in the world, even if we’re not allowed to make those by the CEO’s concerned about the cost of salaries.

Our salaries, at least. There’s have balooned excessively over time, while they ask for more and more sacrifice from those below.

There is a name for something that takes control of a system and grows heedlessly depriving other parts of resources.

We call it a cancer.

Yeah, I just heard the brakes screech on the red column. What does that commie socialist have to say, they wonder? Look, it costs people a certain amount of money to live in this country, and that cost, though variable depending on where you live, exists at a certain level for a good reason: we Americans got pride in how we live. We’re not going to live starving in shanty shacks on the side of the mountain missing meals and dying of easily cureable diseases. Real Capitalism is not about Cheap Bastardry, about pushing prices below what the market allows.

Real capitalism is about giving good wages to good workers, then reaping the benefits as your healthy, happy workers do their hard work and look after the interests of the company that looks after theirs. You can then say, I earned my money by running my company well.

The problem is, people are running their businesses as abstracts and reaping their money mainly in speculating on their stock with their own economic numbers. That’s a lousy way to run a company which has to deal with real world situations.

A thriving economy is about economic flow. The more money that flows through the lower parts of society, the better. Trickle-down doesn’t work because the same people who feel competition is the sole defining principle of capitalism see the poor and middle class as competition.

How long can you say to one person “you’ll sweat and toil to earn this bread, and I’ll eat it” before you start eating away at their initiative to work their hardest, work their best? Folks need to realize that capitalism works both ways.

“There is a name for something that takes control of a system and grows heedlessly depriving other parts of resources.

We call it a cancer.

Yeah, I just heard the brakes screech on the red column.”

First, let me give you bonus points for imagery! Very well done!

“Real capitalism is about giving good wages to good workers, then reaping the benefits as your healthy, happy workers do their hard work and look after the interests of the company that looks after theirs. You can then say, I earned my money by running my company well.”

You have my total agreement there. Some may call it socialism, but I call it sense.

“The problem is, people are running their businesses as abstracts…”

My husband said earlier today as we were discussing this, that the problem is “greed is bad for business, and we’ve legislated greed into the system.” I agree with him on that. We’ve made greed the norm. Not only is it legal, in our legal system it is mandated by the SEC that all publicly traded stocks must gaurantee profits before any other concerns. This is institutionalized greed! And yes, I readily admit the Republicans (but not solely the Republicans) have had a lot to do with this, and this is where (well, one of the places) I take a big side-step away from the two main parties.

I guess my lack of effectiveness in broaching a solution of my own, is that I’m not a greedy person. The height of my ambition is affording my bills, including keeping my home cool in the summer and warm in the winter, being able to go out to eat as a family twice a month to a place like Cracker Barrel, go up to the big city on a date with my husband twice a month, being able to buy any good book I see and being able to buy the expensive line of clothes at Target (versus t-shirts and cotton shorts), all of this while not needing any financial assistance from anyone…and if I could accomplish this by being a published author, all the better!

Now, some people will look at this list of ambitions and think I’m pathetic…I don’t really care. My point is, I really am not a greedy person and I don’t understand anyone for whom avarice is their main drive in life. I just don’t get how that could possibly be a satisfying way to live. So, I don’t really understand the motivation for a man or woman who honestly believes they are worth 431 times their lowest paid employee. I really don’t get that.

However, I do realize that greed is the driving factor towards corruption in our society. While I recognize that we can’t make greed illegal, we can set up our laws so that greed isn’t a mandatory factor when considering business practices.

And this brings me back to the new-found theme of my blogging…our society has shifted so far into the realm of “my rights” that we’ve forgotten what “my responsibilities” means.

Now, some people will look at this list of ambitions and think I’m pathetic - I don’t really care. My point is, I really am not a greedy person and I don’t understand anyone for whom avarice is their main drive in life. I just don?t get how that could possibly be a satisfying way to live. So, I don’t really understand the motivation for a man or woman who honestly believes they are worth 431 times their lowest paid employee. I really don’t get that.

Thank you for your contribution to this thread. You have personalized it in a way that I could not have. Your candor is refreshing, and I’m sure I’m not alone in feeling that what is pathetic is not your so-called lack of ambition, but rather someone who convinces themselves that they are justified in earning hundreds of times as much as another who must struggle to make ends meet.

I threw out this article to see what ideas and perspectives would be brought to bear on this mushrooming inequity which I believe is truly out of bounds. 431 is a very large number, when 1 represents an amount that someone is expected to live on, and when 431 is the average ratio between CEO pay and non-professional worker pay. (There are a lot of companies which have remained at fairly reasonable ratios, so there are others that are much, much worse.)

As for a solution, I admit to being very uncertain about what would make sense. I would rather that society simply had a strong enough ethic that such gross inequities are just not right, that no regulation would be necessary. Regulating wages, or even wage ratios is admittedly very problematic in a capitalist system, and I’m skeptical about going there. But I do think shining a spotlight on the inequity and fostering disapproval of this practice is not out of bounds.

I really am not against wealth or success. I do not wear “Eat the Rich” labels on my clothing. It’s natural that successful entrepreneurs who take risks and create jobs should be able to profit handsomely from their efforts. I do not begrudge someone’s becoming a millionaire from a successful enterprise.

But the pay inequity which is becoming institutionalized in the corporate world, deserves a long, hard, critical look. My advice to the corporate kingpins is to reform yourselves, or we will all live to regret the likely fallout.

Let me add a quick thank you to all of you who have participated in this thread in the best WatchBlog tradition of critiquing the Message; not the Messenger. I’ve been unavailable to respond to most comments, and as you can see from my last post, I admit to not having answers to this problem. Hence for instance to Jbod’s fine array of questions near the top, I’d mostly have to say “I don’t know.” I do know we need to recognize and evaluate problems before we have an answer to them. That’s what the media should be doing, and much of the MSM too often abdicates that responsibility.

I think a major issue with the way people run their businesses is that they seem to be focused only on making money. (Yes - the only reason any of us work is to make a paycheck… but…) It’s a business being run, not a money press. You first have to be focused on the job/product you are being paid for, then you count your money. Then you take out the employees salaries, costs, blah blah blah - and then you have the remaining profit. That’s what the guys at the top get to play with.

However, when the guys at the top start messing with the way the business is run in order to try and pull more money out - then you are taking away from the company. At that point, the top guys are being paid with company blood, not profit. That’s what makes companies anemic … that’s what makes companies die.

Very large companies have a lot of fat in them, so the initial bit of draining off the top can seem like a good thing… and maybe it is. But, at some point you start cutting into the meat of the company… and example was IBM after their 1st Qtr. earnings - they were bad. So, they cut 10,000 jobs worldwide to make wall street happy and their stock bounced back up. Can anyone see this as a smart business move?

I know the temptations to pull out more money than the company is generating… I went 14 months without a salary while working fulltime - that sux. I lived off of credit - that sux, too. If I had tried to pull out any money at that point, I’m sure the company would’ve dies and none us here would be working… at least not here, 12 years of very hard work would’ve gone for a pretty damn cheap payout. When it’s your baby, it matters… but I’m thinking that the top dogs at huge companies don’t see the ownership or long term viability, they see they cash they can pull out.

I think when your are paying yourself 400+ times your lowest paid employee - you are pulling out more than the profit.

And there’s also one other missing ingriedient. Morals…that is, a lack of morals. Morals are not a natural tendency. Morals must be learned. Logic, wisdom, and love for others is needed to grow those morals.

Without morals, why work hard, when you can legally plunder someone else ?

We no longer have a beneficial system of capitalism, free market, free enterprise.
We have corporatism in league with government, legal plunder, and perversion of the laws to do what the laws originally were supposed to prevent.

Laziness and a lack of morals are why this nation is in decline. It didn’t happen overnight. It’s been in the making for decades. Shrinking middle class, poor parenting, abuse of eminent domain laws, incarceration and execution of innocent people, while presidents hand out pardons to criminals that pled guilty, irresponsible, arrogant, and unaccountable government, and fiscal and moral bankruptcy.

What’s amazing is how long the people will tolerate such oppression. Look at Russia, China, N. Korea, Iran, Iraq. A long time, obviously.

The same laziness and lack of morals for those that legally plunder others, also makes the victims (the people) like sheep, who tolerate it, indefinitely…only rebelling, maybe, when the pain becomes too much. Only when there is an extreme, galvanizing event to finally rebel.

What I want is to pay responsible and good people in a responsible and good manner. Now, what does that really mean?

People with specialized skills deserve to be paid more than those with unspecialized skills. This is why heart surgeons are paid more highly than janitors. They may not be better people, or husbands, or fathers etc, but they do have a skill that is harder to find.

People who put in the effort are worth more than those who don’t. This is where unions fail most often—they pay equally according to tenure rather than capacity or capability. We all know people who fulfill the least requirement to get by. I know a contractor who works just enough to qualify for his union benefits, and then lives on unemployment insurance and his wife’s salary the remainder of the year. It’s his choice, but I don’t want to pay that type of person very highly.

Creativity can pay off big. J.K. Rowling is a billionaire, simply because she thought of a story and wrote it in an appealing manner. Michael Dell figured out how to sell computers from his dorm room at a profit, and has made himself rich. Bill Gates pioneered an easier way of computing. Madonna continually reinvents herself to keep the public interested in her. These people do something that anyone COULD do, but most don’t have the unique special quality.

The market has a lot to do with all this. We don’t pay janitors 100K annually because we can find someone to do the job for less. We don’t pay $50,000 for a Hyundai automobile because we can find someone willing to sell it for less.

But I’d agree that CEO’s do not deserve the huge salaries they get, by and large. Some do, but most don’t. Its different when they are paid with stock, since this is an indication of company growth (note the number of secretaries at Microsoft who are now millionaires due to having bought stock).

d.a.n.,
Although your pattern in our history (America & Abroad) is fairly accurate, you left out citizens like Henry Ford that took on “The Estblished Quo” and changed the world. However, unless one of the “Social Elite” in our society has the courage to stand up as Mr. Ford did, I do see what you have wriiten to be the case.

Nevertheless, look at every citizen as being a consumer. Is it not in every Human’s inherent best interest that every consumer be able to pay for what they need to consume to live a simple productive life?

JBOD is right about not wanting to have to pay a Janitor a $100K/yr. And while earlier in this post I have shown that a Livable wage is approx.$15.00/hr, America has many societal tools at our disposal to lower that wage in a positve manner as well as the destructive method being done now.

Housing cost can be lowered in a city through the sale of Local and State Bonds that in turn can go toward building Afordable housing. Non-profits organizations as well as Co-ops (a Group of Citizens) can take these funds and help the Low wage earners build homes for themselves. Other programs can be designed where “Community Co-op Stores” to purchase in bulk those things used daily by these low wage earners. All without changing a single Law of The Books.

However, none of these will matter unless “We the People” learn one cold hard lesson and that is Knowledge is Absolute Power. Thus, to that extent society must take on the reasons why our children drop out of school. I couldn’t tell you how many times I have heard a teenager tell me that school doesn’t teach them a single thing that will help them in the Real World.

I bought a DELL notebook that failed more times than all the computers owned in 22 years (all put together). Altogther, my DELL Inspiron Model had 22 hardware failures in 36 months (e.g. 6 motherboards, 3 harddisks, 4 videocards, etc.).

This brings up another example of corporatism.

Many computer magaizines ignore the horrible quality of DELL computers, and keep giving them high marks in their magazines, despite the reality of the high failure rates.

Why? Because magazines are paid for advertising space in their magazines….so they’re not going to be truthful. And, DELL advertises a lot. That’s why I also no longer subscribe to such magazines…because their editors picks can not be trusted. Also, DELL has a big problem paying rebaits ( www.scamwagon.com/dell/ ), and was also guilty of violating the Soldiers and Sailors Credit Relief Act ( consumeraffairs.us/mil/ ).

His idea is concerning a law for minimum wage: Make the law respective to the companies, everyone who worked for a particular company would have to make at least a 20th of what the top wage-earner of that same company makes.

i do not think a twenty percent line would effect many comapnies, and then only those who need reforming the most.

i would stipulate that wages, salary, stock options, benefits be included in calculating income and that subcontractors be included as employees— wouldn’t want companies to simply divest all inside labor in preference of hiring it out. If the percentage were gradually decreased other effected companies could prepare. i would like a ten percent target.

Good health insurance on the lowest paid workers would most likely be the first option chosen to equalize the pay scale followed perhaps by retirement benefits. Hopefully it will make education, training and investment in the work force more attractive.

This would further discourage monopolies/mega-corporations as well as the shipping of jobs outside the country. Adding the Reagan 20 percent tax disincentive allows for choice.

d.a.n.

At that point, the top guys are being paid with company blood, not profit.

Joe-
I’m all for people getting paid according to expertise and competence. I just would argue that Corporate America is underpaying the middle and lower classes, and that is harming our economy. When money doesn’t flow equitably through the system, when people don’t have disposable or even livable incomes, they become a drain on the system, instead of assets to it.

I’ve lived the reality of that for a long time. I’ve seen my friends jacked around on their schedules by their employers. I’ve seen parents worked into ill-health, laid-off, underpaid.

They remember better times. Sad to say, I remember them, too. We’ve got to stop kidding ourselves that Wall Street numbers say all that needs to be said about the health of our economy. The ability of those willing to work to maintain a decent standard of living has to be factored in. This is not liberal socialism, this is the simple fact that our market has driven the price of goods and services required to survive in this country higher. It’s not that people are unwilling to take certain jobs, it’s that they are unwilling to take them at wages that cannot possibly satisfy their needs.

Stephen Daugherty wrote:
Its not that people are unwilling to take certain jobs, its that they are unwilling to take them at wages that cannot possibly satisfy their needs.

Exactly.
While I don’t advocate laws to control wages, I’d encourage people to grow their own companies and run them better. Look at South West Airlines. There are a few examples of companies that treat their people well, but don’t tolerate bums either.

IMO the best way to drive home the point of some corporations screwing the American Public is to bring about the economic and political power that “We the Consumer” have. Remember in the 80’s when the slogan was “Be an American Buy American?” Well, the same thing can be said today for corporations that support The American Way and is a good stance given The Republican Party’s committment toward Special Interest groups. “We the Consumers for the Consumers” would make a clear statement to those who want to put The God Almighty Dollar over the Life of their fellow Human.

Thank you for an interesting article. FYI, back on September 2 I wrote a piece entitled “The Excessive Compensation Assessment” in the Independent column that concerned this issue. In it I proposed a solution to this problem that I thought might be both ethical and practical.

I was wondering if you could take a moment to look through it and let me know what you think about it. If nothing else, at least it addresses some of the questions raised by JBOD in his comments (specifically the question of placing a fixed cap on CEO compensation).

“i would stipulate that wages, salary, stock options, benefits be included in calculating income and that subcontractors be included as employees wouldnt want companies to simply divest all inside labor in preference of hiring it out. If the percentage were gradually decreased other effected companies could prepare. i would like a ten percent target.”

The correction will likely occur when the “line worker”, the “middle class”, the “grunt”, or whatever you want to call them gets fed up. What are they going to do about it? Probably organize.

Most folks have seen Unions falling apart and their numbers dwindling. I blame most of that on the union management and getting involved in politics too much. People organize when they feel they are being treated unfairly and they want their fair shake.

The Unions became corrupt over the years and took their eyes off of the people they were supposed to be representing. That is why they are where they are today. The latest split in the AFL/CIO was seen as another union falling apart. I see it as a good sign for unions. Maybe they will get back into representing the front line worker, the grunt, etc.

I’m not necessarily pro- or anti-union. I think there is a reason they came into existence. Then they abused their power over the years by protecting non-productive workers and getting greedy themselves.

When “front-line worker” America is fed up with the corporate system I think there could be a resurgence in unions.

It doesn’t have to be that way but when corporate America looks out only for the upper management….it becomes inevitable.

If only both sides could treat each other with dignity and respect things wouldn’t tend to swing so drastically every 30 years or so.

” I do know we need to recognize and evaluate problems before we have an answer to them. Thats what the media should be doing, and much of the MSM too often abdicates that responsibility.”….The last time I heard, THAT isn’t the media’s job. The media’s job is to report the news accurately and leave it up to me to draw my own conclusions.

“Stephen Daugherty wrote: There is a name for something that takes control of a system and grows heedlessly depriving other parts of resources.
We call it a cancer.

Yes. Or a virus. Or a parasite. Or legal plunder.”…..and some of us call is welfare and other social programs.

FYI, back on September 2 I wrote a piece entitled ?The Excessive Compensation Assessment? in the Independent column that concerned this issue. In it I proposed a solution to this problem that I thought might be both ethical and practical.

Yes, nice article, and an interesting proposal you gave. I’m sorry I missed it earlier. Thanks for bringing it to our attention.
Posted by: Walker at September 13, 2005 5:56 PM

“Mostly, teenagers take those jobs, because
its not enough to live on.”

Your comment implies you don’t pay much attention to who’s serving your food, or you only go to fast food places in the evenings or on weekends. Teenagers can only work after school. Many adult work in fast food…adults with kids, adults on welfare.

steve smith,

“So Stephen the alternatives are what :

Dont take the job because zero wages satisfies your needs as much as whatever the job is paying

or

Go on assistance, welfare, etc. which pays better than the job does but, costs you and I more.”

No “or” is necessary. At least where I’m at, you can both take the job with an unlivable wage, because that’s all you can get AND still get welfare in the form of food stamps, medical assistance and frequently heating assistance (though no rent checks). This belief that people receiving welfare don’t actually work needs to be put down as the myth that it is. While some people do that, it’s not the majority of the people who receive welfare because neither welfare nor their wages are sufficient in and of themselves to actually provide for a family.

Sorry,
Yes, when I do go, it usually is on a weekend or evening. So perhaps that’s why it seems that way. So, they’re not mostly teenagers?

It’s certainly not enough (or barely enough) to live on.

Do some welfare rules (in some states) prohibit receiving welfare benefits while also receiving a very small income from a job ? That doesn’t seem right, when it will probably take both the income and welfare benefits to make ends meet just for one person.

Do you think minimum wages should be raised ?
I’m not sure government controlling wages and prices is a good idea…it doesn’t seem to ever solve the problem.

Should the minimum wage be increased, or should welfare benefits be increased, or both ?

Dan,
Neither minimum wage or welfare wages need to go up to accomplish making “The Poor” in America economically viable and fimamcailly independent. By using our intellect, our communities can purchase Housing Bonds which will permit our Civil Leaders to build homes that cost less.

Since a person making $7.00/hr can afford $361.20/mth in shelter & utilites (meeting the HUD Standard of 30%), the community would be better served in designing housing and financing that meets that requirement. A married couple with both parents working and getting paid $7.00/hr could afford paying $722.40/mth. which is close to what mest pay for homes in the bad sections of town.
Other methods can be used like the ones use by Habitat for Humanity. Interest free loans is another way. The only bench mark that is required by Law is that the program makes “Common Sense” when read by a Layman.

Dan,
Another way to look at how we can improving the living standard of “The Poor” in America is to look at what the materail cost of building an affordable home. With $50,000.00 dollars and a bunch of hammers, a person can erect a nice home. Divide that price tag over 30 years and the payment is about $140.00/mth. Now, add free or tax credited labor through local and state agencies and non-profits to erect it and the “Poor” has over$200.00/mth to pay for utilites and interest. And not a dime has been spent that would increase the cost of an item by a wage increase.

Steve Smith-
Tell me something: I’ve got student loans. Should I settle for a job what pays less than my student loan debts, and thereby force myself deeper in debt on account of hardship deferments, or should I get a job that fits my needs, and pays me what my education is worth?

People will go on welfare because the job market is poor in their area, and they don’t necessarily have the ability to get work at the moment. It’s that or starvation.

It use to be experience counted. Now it’s a reason to fire people, because experienced workers demand salaries to match. It use to be you gave people enough to survive. Now you just give enough to keep them from going elsewhere to find a job. It use to be that an honest days work got you an honest days wages.

Now it’s all about rewarding the executives for their hard work, essentially by handing the lion’s share of income to them.

This is not just about the poor, but the middle class who function as the engine of the consumer economy. What’s the point of underpaying and underemploying good workers for poorer workmanship and poorer loyalty?

A person should seek the highest paying job that he or she is qualified for. In fact, if you can get a high paying job that you are not qualified for, you should take it.

You miss my point. Which is, in lieu of exhausting the job search and coming up empty, you should bite the bullet and take the best job you can get at the time. If for no other reason than personal pride SOME job is better than NO job.

“Tell me something: Ive got student loans. Should I settle for a job what pays less than my student loan debts, and thereby force myself deeper in debt on account of hardship deferments, or should I get a job that fits my needs, and pays me what my education is worth?”

Your education is not worth anything. WHAT YOU DO WITH YOUR EDUCATION IS WHAT HAS VALUE.

Yes, $50K can build a good home (nothing fancy),
depending on the price of the lot.
Some lot prices, for one fifth of an acre, often cost more than $50K. Then, there’s property taxes, which monthly, could be more than many earn in a week.

Yes, it’s probably not a good idea to meddle with prices and wages, because it never seems to work.
Also, it’s artificial. Fictitious wages and prices only shift and confuse things.

I’m not sure about public housing.
In the past, that’s the fastest way to turn a neighborhood into a slum.

And, government shouldn’t get into the house building business. They already meddle in too many things already. And, that, again would only shift and confuse matters further.

It’s probably best to keep it simple, treat it for what it really is: welfare

And, do a better job of determining who is truly needy, and who is abusing the system ? That way, the truly needy will still receive help. Is it that difficult to know who is truly needy, and who is abusing the system ?

I, personally, am not opposed to tax dollars to pay for the truly needy. The only problem is, government wastes so much, the truly needy aren’t getting help. And, there’s always much abuse of the welfare system too. Thus, we end up with the truly needy still needy.
Henry Schlatman,
But, if welfare abuse is too prevelant, then perhaps government could provide jobs of some sort ? Perhaps that would minimize the abuses ? It’s a tough problem. More and better jobs would resolve much of these problems.
Unfortunately, with globalization, there’s a decline in jobs and salaries, and it’s likely to get worse.

Stephen Daugherty wrote:
It use to be experience counted. Now it’s a reason to fire people,…

Boy, ain’t that the truth.
I’ve seen companies make employees train their low-cost replacements, and then fire the original employee. And, lots are trying to get H1B visa workers.

I’m sorry for your predicament.
It’s sad how so many young people these days have so much debt after graduating.
I’m not sure the education is worth it really.
People can learn a lot without college.
In fact, college has its bad points.
It’s becoming a business, and I’m not sure it’s really teaching that much that is all that useful, that people can’t learn on their own if they really want to (I’ve seen many that learn as much or more than those with degrees).

No. My husband (35 y.o.) just quit a job at a fast food restaurant. And now, I’m working in sales instead. I’m going to be making 3-5 times what he made easily, but I have a different set of skills than he does. Now that my kids are getting enough help that I don’t need to be here 90% of the time, I can do this. Which, will help pay off our house a lot faster. ;-)

“Do some welfare rules (in some states) prohibit receiving welfare benefits while also receiving a very small income from a job ?”

I don’t know. Not in Wisconsin. My husband worked and we received assistance. Since we’ve had kids, we’ve never been off medical assistance. Most of the time that and WIC is all we got. Sometimes food stamps, some times heat assistance. And now that we own our own home, we’ve gotten some help making it more energy efficient. The state isn’t “taking care of us” by any means, but they are helping us to meet ends. It’s made the difference between sickly, malnurished kids and kids who are doing a lot better than their doctors ever thought.

Now, because my children have severe, life-long disabilities, we also receive SSI, which is actual cash. With this, however, it is required (or at least strongly recommended) that you work. If you’re in-between jobs, that’s one thing, but if you refuse to get a job you can lose SSI for your kids. (Obviously, it’s different if you are an adult receiving SSI due to disabilities.)

“Do you think minimum wages should be raised ?”

Not as such, no. I think that more equity can be built into our economics without artificially inflating minimum wage. I think giving companies incentives and/or penalties to fix the problem of inequal wages would be a more effective way to go. I also think people should have the choice to earn less money to work for a company they believe in, without having to earn no money at all, so that people who are working because they believe in what they do and not because they need the money, can still do that. And, such people do exist. We had a therapist who treated one of our boys who worked for the pleasure, not the money.

“Should the minimum wage be increased, or should welfare benefits be increased, or both ?”

Welfare can be a dangerous thing. I think there really needs to be a balance between people who need it getting it and people who misuse it not getting it. Wisconsin’s approach to that problem, is once a child is five the parent has to work to receive food stamps, if they can’t find a job they are put in a program that has required attendance and a quota for applications. But, I don’t really know how effective it is. My husband and I aren’t a good example of it being effective, because we’re both motivated to better our circumstances; it’s just that finding something that works has been a difficulty and our children’s needs prevent us from taking certain risks we might otherwise take, for instance, relocating would be a traumatic experience that would up-root them from their therapy and cause dramatic regression…and, for us, that’s a cost that’s not worth the benefit of earning more money.

Now that we are in a position where it will not be detrimental for me to have a job, I have one. My long-term goal is to get good enough at it that we will be financially beyond receiving any assistance. However, that’s a scary goal to have. It requires we lose all the medical assistance that we’ve been relying on, and because of the nature of the work I do, I will have to find another way to secure our medical needs on my own. For a lot of people, that risk and hassel is too much, so they just don’t make as much money as they good. Government officials will even tell one parent of a two working parent families to quit there job for the assistance…some do it, some don’t. I want to be the kind of person who doesn’t do that sort of thing, but first I have to earn the money. ;-) I’m working on it!

There are some serious flaws to your argument. Owning a home isn’t as simple as the cost of the materials and the home.

1) There’s the land, which can cost quite a bit by itself.

2) There’s insurance, which is rightfully necessary for a mortgage.

3) There’s property taxes, which again can be quite costly.

4) There’s the need for decent credit, which is where a lot of poor people get stuck. Many either have no credit or bad credit, check n’ cash and rent to own places are exacerbating this situation.

5) There’s the costs of maintenance. Getting a plumber to come in to fix a burst pipe costs the same if you’re poor, moderate or rich. Unless, you pull strings, which either wealth class can do.

I’m sure there are probably more things to add to your equation, but those are what I can think of right now. And yes, I’m a homeowner and I know paying maintenance costs can be a great burden when you’re on a tight budget.

“In fact, if you can get a high paying job that you are not qualified for, you should take it.”

Sure…we should encourage people be promoted to their level of incompetence. I mean, it worked so well with Brown. That’s exactly what we need to help our economy run more smoothly and equitably.

(For those who can’t smell it, that’s sarcasm.)

“If for no other reason than personal pride SOME job is better than NO job.”

And if that job destroy’s your health or gives you a permanent injury because you weren’t competent to do it? How is that a boost to your pride?

“Your education is not worth anything. WHAT YOU DO WITH YOUR EDUCATION IS WHAT HAS VALUE.”

Knowledge has value; while it cannot always be directly linked to monetary worth, that doesn’t mean “education is not worth anything.” If you actually learned something (which isn’t gaurenteed simply because you earned a degree), then you have gained something of value.

Some jobs simply aren’t worth having. The benefits of the job aren’t compensation enough to have them, the detriments of the job strongly out-weigh whatever flimsy compensation you get, and the benefits to society for the job being done, aren’t enough to make up the difference. Such jobs do exist, and what counts as such a job for one person isn’t the same as for another. For many people factory work is a good job. For me, even though it’s usually good pay, it’s not worth it. Factory work would destroy my already weak wrists and probably force me to have surgery, which would prevent me from effectively parenting my children for an extended period of time, which my children would not understand and thus would probably jump on me (as usual) which would re-damage my wrists while they were healing, thus requiring more drastic measures….and on and on it goes. Not worth it.